Business: Costs of Litigation (State Court)
Clients almost always want to know how much a lawsuit is going to cost them. The only honest answer a lawyer can give is “Who knows?”
There are a few exceptions, such as an uncontested quiet title action or uncontested probate, but generally the length of time and amount of work involved in a case depends very much on what the other side does. If the opponent files a motion, you will have to respond. That slows things down and creates more work for the lawyer.
The same is true for actions the judge takes in the case. Judges impose deadlines and, sometimes, take actions sua sponte (i.e. without a motion). The lawyer has to respond accordingly.
And, what if you settle the case along the way? What about appeals? What if the case is removed to federal court?
So, it is essentially impossible to tell a client just how much a lawsuit will end up costing. However, that does not mean you cannot have some idea of what to expect. That is the purpose of this article.
General Rule 1: It is less expensive to defend a case than to prosecute a case. It is up to the Plaintiff to move the action forward, so the pressure is on the Plaintiff to get things done. With some exceptions, it is usually less work for a Defendant because the Defendant has the luxury of doing nothing until the Plaintiff takes action.
General Rule 2: State court is less expensive than Federal court. Also, federal judges impose more stringent deadlines, so the costs are incurred in a shorter length of time. Your ability to budget during the course of litigation is more limited in federal court.
Also, the different stages of a lawsuit are predictable. So, we can break down what happens at each stage and come up with some ballpark idea of the costs and fees for each — always with the caveat that things can be more or less expensive depending upon what the other side does.
Stage 1 – Initiation
If you are the Plaintiff, then your lawyer will need to draft the Complaint and Summonses to get things started. Depending upon the complexity of the case, that could take up to five (5) hours of work. So, that is going to be a couple of grand or so just for the work.
Then, the Court will charge a filing fee. The amount may vary a bit, but it is probably in the range of $600.
After that, the Complaint and Summons have to be served by a process server. You can have the Sheriff’s department do that, which is cheaper, but they take longer . . . and you cannot really bug them. Most people go with a private process server, which will cost around $100 per defendant.
So, if you add it all up, you are looking at something like $2,500-3,500 to get the case off the ground.
If you are the Defendant, then you only need to file a response to the Complaint. There are a few different types of responses you might file, such as a Motion to Quash, Motion to Dismiss, or an Answer with Defenses. Your lawyer will decide which approach is best, but any one of these responses is about 1-3 hours of drafting. So, maybe you are looking at about $800-1,000 for each of these responses. Bear in mind your attorney may use just one of these responses or, perhaps, all three, depending upon the situation.
Stage 2 – Discovery
This is the stage where the parties get information from the other side or third parties. There are cases that require only minimal discovery or, even, no discovery at all. Also, the type of discovery utilized makes a big difference in costs. So, results may vary wildly at this stage.
There are three types of written discovery requests: Interrogatories, Request to Produce and Request for Admissions. This “discovery products” are somewhat predictable since it is simply a matter of drafting them and sending them out. Expect about 2-3 hours of work ($800-1,600) per discovery product. Your lawyer will decide whether to use some or all of these discovery options.
Another common discovery tool is depositions. Those are a different beast altogether.
First, you may have to issue a subpoena, which is additional drafting. But the main thing is that grilling a deponent in person is very often a full-day affair. Once you go to the trouble of getting the person in the seat and under oath, you will want to take full advantage. And, usually, the deponent will put up some resistance, which slows things down. Plus, you have to pay for the court reporter and, sometimes, the room.
So, you can expect a single deposition to cost between $1,000-5,000. Depos are much more expensive but, depending on the deponent, the can be very effective.
Also, for complex cases, there can be rounds of discovery. So, you may be sending out (“propounding”) a first set, second set, third set, etc.
Another thing is the motion practice that can happen at this stage. For example, if the party receiving the discovery request does not respond, or does not provide good responses, then your lawyer will have to file a Motion to Compel and, probably, go to a hearing. That means additional expense.
Stage 3 – Summary Judgment
Some cases can be disposed in whole or in part without going all the way to trial, such as cases based on a contract. That usually happens by filing a Motion for Summary Judgment. If you are the Plaintiff, you are hoping to end the case with this motion, so your lawyer is going to put some time into researching and drafting this motion. Then, there will be a hearing on the motion. I would estimate this process will take from 3-6 hours of work ($1,200-3,000), depending upon the complexity of the issues.
Stage 4 – Trial
Summary judgment is for cases that do not involve evidentiary issues. In other words, the judge is not required to hear testimony or deal with disputed facts. Whenever that is not possible — which is very often — the case will have to be decided through a trial.
HLA deals mostly with business and real estate disputes, which do not typically call for a jury. So, the analysis here is on non-jury trials. Just bear in mind there are additional steps involved for jury trials.
The trial is “show time.” All the exhibits and witnesses have to be prepped. The research has to be finalized. The strategy needs to be discussed, and everybody involved has to be ready to go. It’s a big deal. Then, there is the trial itself, which can take one day or a week, depending on the case. So, again, results can vary wildly.
But, just to give you some idea, this stage is likely to cost somewhere in the range of $3,000, for a relatively simple case, to $10,000 for a fairly complex case. This is, of course, in the context of typical business litigation (i.e. not big corporations) in State court.
One thing you can probably count on is mediation. At some point, one of the parties will ask for mediation, or the judge will simply send you to mediation in the hope of getting the case of the docket. That will be a full day of work, plus the mediator’s fees, so count on $2,000-$3,500 for that.
Then, there are appeals. There is even something called an “interlocutory appeal,” which can happen before the case is even decided. So, there can be costs of appeal both during and after the case. There is no “motion practice” in appeals, so the costs are fairly predictable. But, appellate work is notoriously expensive because the level of “lawyering” goes up.
Hopefully, the analysis herein helps you to better understand the factors involved in litigating a case, so you can better prepare and make informed decisions. Never forget that a case can settle anywhere along the way, which puts an end to the expenses.